Some developing country governments spend years making the reforms that international financial institutions want – only to find that their efforts are not rewarded.
They may make budgets more transparent, publish their debt obligations, set up independent bodies to monitor government spending, and complete an International Monetary Fund programme, but still receive the same ratings from credit agencies. Borrowing costs remain high.
The gap between what countries have built and how that progress is reflected in credit ratings and market pricing is persistent and has consequences. It translates into higher borrowing costs, tighter fiscal space, and fewer resources for public investment.
